The Exchanges

Q think it's dire. It's just we're back to a world. What, what got inverted for two years from late 20 20 to 20 22 We, this weird world happened in venture where each successive round got earlier, easier. It never got, it always was supposed to be harder, right? There was always supposed to be a winnowing from each round, and then it got inverted, it got easier, didn't it?

A Yeah, I think is, is why I don't really see that as maybe like a very tough time now. It's more like we readjust to what it should have been. So it just had been way too crazy in the past. Um, and then now we go back to, um, multiples and numbers that makes more sense. I think it just went Out of the line. And then now we're going back to something more reasonable. So during that time, you can also have seen a few VCs and a few entrepreneurs with a lot of discipline in terms of for funds manager is don't raise too much money. So that is difficult because a lot of them make their money out of management fees and not so much on carry. But it's the same for the founders. A lot of them also, um, didn't manage to have the discipline to don't raise too much because money was so easy to get. And a lot of them were willing to get crazy valuation. But I'm seeing now, like, people that are building their second or third company here, even if one of them got an exit with Google here in, in Singapore, um, they're only raising one, 1.5 million at an eight to ten million valuation, where they can, even if today still raise five million at a twenty-five million valuation, but they don't, because they know that is going to be very difficult for them in one or two years down the line, because they have raised too much money at a too high valuation. So I think the one having discipline will go t…

AI assessment note: “It's more like we readjust to what it should have been.”

Q and profitability versus a hundred percent growth and decent capital efficiency, because it doesn't, it doesn't get you there, right? So, maybe, maybe you knew that and it's not helpful, but I just wanted to hammer that point in because, um, no one's excited for crummy growth and profitability. It just doesn't get, that's the wrong, that's the wrong message that some on the internet people think is true, right?

A I, I think in, In emerging markets, some VCs may care about you being profitable because they have way less risk adverse, and a lot of them have more a PE mindset than a VC mindset. So on a PE mindset, profitability matters a lot. On a VC, way less because you look at very different multiples, as Jason mentioned. PE, you may expect your company to do three to five X. VC, if you expect your company to do three to five X, you're never going to return three X out of your fund because most of them are going to die, and then are not going to cover the one that Uh, the one that succeeded was not going to cover the one who died. So, here in the region, a lot of VCs may care more for that, uh, but maybe then we can argue they're not VCs by doing so. Um, what they offer you is, um, everything equal compared to another company. They offer you some more time for your fundraising, because you will not have much deadline about your running out of cash, and some VCs will have to move maybe faster if you create enough FOMO to invest in your company. Um, so I think that can help, but it really depends on which audience you're talking to.

AI assessment note: “In emerging markets, some VCs may care about you being profitable”